My son has a small business on the side repairing cars and motorcycles. He probably made around $2000 last year. He carries no inventory; has few deductions. Is a schedule C needed or is there a simple way to report this income? Thanks.
Yes, a schedule C is needed. Since your son earned more than $400 from his repair work, the IRS requires him to report this as self-employment income. Even without inventory or many deductions, the IRS uses Schedule C to determine "Net Profit."
He will owe approximately 15.3% in Social Security and Medicare taxes on that profit, regardless of whether he owes any regular income tax.
If you still claim him as a dependent on your taxes, he still files his own return.
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